{"id":59715,"date":"2021-10-07T07:02:12","date_gmt":"2021-10-07T12:02:12","guid":{"rendered":"https:\/\/olduvai.ca\/?p=59715"},"modified":"2021-10-07T07:02:12","modified_gmt":"2021-10-07T12:02:12","slug":"why-shortages-are-permanent-global-supply-shortages-make-fantastic-financial-sense","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=59715","title":{"rendered":"Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense"},"content":{"rendered":"

Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense<\/a><\/h3>\n
\n

The era of abundance was only a short-lived artifact of the initial boost phase of globalization and financialization.<\/i><\/p>\n

Global corporations didn’t go to all the effort to establish quasi-monopolies and cartels for our convenience–they did it to ensure reliably large profits from control and scarcity.<\/b>\u00a0Not all scarcities are artificial, i.e. the result of cartels limiting supply to keep prices high; many scarcities are real, and many of these scarcities can be traced back to the stripping out of redundancy \/ multiple suppliers of industrial essentials to streamline efficiency and eliminate competition.<\/p>\n

Recall that competition and abundance are anathema to profits.<\/b>\u00a0Wide open competition and structural abundance are the least conducive setting for generating reliably ample profits, while quasi-monopolies and cartels that control scarce supplies are the ideal profit-generating machines.<\/p>\n

The incentives to expand the number of suppliers, i.e. increase competition, are effectively zero.<\/b>\u00a0America’s corporations spent $11 trillion buying back their own stocks over the past decade; that’s equal to the combined GDP of Japan, Germany and Italy. If adding new suppliers to the global supply chain were profitable, some of that $11 trillion would have exploited those vast profits.<\/p>\n

The financial reality is attempting to compete with an established cartel that has captured regulatory and political mechanisms is a foolhardy waste of capital.<\/b>\u00a0If firing up a new supplier of essential solvents, etc. was so captivatingly profitable, the why wouldn’t Google and Apple take a slice of their billions in cash and go make some easy money?<\/p>\n

The barriers to entry are high and the markets are limited.<\/b>\u00a0A great many specialty lubricants, solvents, alloys, wires, etc. are essential to the manufacture of all the consumer and industrial products that are sourced globally, but the markets are narrow: manufacturers need X amount of a specialty solvent, not 10X.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense The era of abundance was only a short-lived artifact of the initial boost phase of globalization and financialization. Global corporations didn’t go to all the effort to establish quasi-monopolies and cartels for our convenience–they did it to ensure reliably large profits from control and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[24078,2357,5809,4651,587,3329,4053,3237],"class_list":["post-59715","post","type-post","status-publish","format-standard","hentry","category-economics","tag-charles-hugh-smith-2","tag-competition","tag-financialisation","tag-globalisation","tag-of-two-minds","tag-profits","tag-shortages","tag-supply-chains"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59715","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=59715"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59715\/revisions"}],"predecessor-version":[{"id":59716,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59715\/revisions\/59716"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=59715"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=59715"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=59715"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}